20150304final_order_no_33240.pdf

Office of the Secretary
Service Date
March 4,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S APPLICATION FOR )CASE NO.IPC-E-15-02
APPROVAL OR REJECTION OF AN )
ENERGY SALES AGREEMENT WITH J.R.)ORDER NO.33240
SIMPLOT COMPANY )
On January 30,2015,Idaho Power Company filed an Application requesting that the
Commission accept or reject an Energy Sales Agreement (Agreement)between Idaho Power and
J.R.Simplot Company.The Agreement is for the sale and purchase of electric energy generated
by the Simplot-.Pocatello cogeneration project,a small power producing facility.The Agreement
replaces a contract executed in February 2013 that expired on March 1,2015.The Commission
issued a Notice of Application and Modified Procedure on February 10,2015.Order No.33223.
Commission Staff was the only party to file written comments.
BACKGROUND
The Public Utility Regulatory Policies Act (PURPA)was enacted in 1978 “to lessen
the country’s dependence on foreign oil and to encourage the promotion and development of
renewable energy technologies as alternatives to fossil fuels.”Order No.32580 at 3,citing
FERC v.Mississippi,456 U.S.742,745-46 (1982).PURPA and its implementing regulations
require electric utilities to purchase the power produced by qualifying facilities (QFs),such as
Simplot’s cogeneration’facility in this case.Idaho Power’s Agreement with Simplot is a
PURPA contract,and Simplot’s cogeneration facility is a QF.
The rate that a QF receives for the sale of its power to a utility,referred to as the
“avoided cost”rate,is established by the Commission,and represents “the ‘incremental cost’to
the purchasing utility which,but for the purchase of power from the QF,such utility would either
generate itself or purchase from another source.”Order No.32580 at 3,citing Rosebud
Enterprises v.Idaho PUC,128 Idaho 624,917 P.2d 781 (1996);16 U.S.C.§824a-3(b);18
C.F.R.§292.304a(1)(i-ii).
For QFs generating less than 10 average megawatts (aMW)of energy (100 kilowatts
(kW)for wind and solar),the Commission calculates and publishes rates with a surrogate
A cogeneration facility is one that “produce[s]electric energy and forms of useful thermal energy (such as heat or
steam),used for industrial,commercial,heating,or cooling purposes,through the sequential use of energy.”18
C.F.R.§292.202(c).
ORDER NO.33240 1
avoidable resource (SAR)methodology,using long-term natural gas price forecasts.Order No.
31092 at 3;Order No.32176 at 11-12 (reducing eligibility cap for wind and solar QFs to 100
kW);Order No.32262 (affirming reduced eligibility cap for wind and solar QFs).These
published avoided cost rates are periodically updated as new natural gas price forecasts are
issued.Order No.31 092 at 9.
THE AGREEMENT
Idaho Power and Simplot entered into the Agreement in this case under the terms and
conditions of various Commission Orders applicable to PURPA agreements for “other”projects
delivering less than 10 aMW of energy,using published rates based on the SAR methodology.
See Order Nos.32697,32737,32802,33084.Under the terms of the Agreement,Simplot
elected to contract with Idaho Power for a one-year term using non-levelized rates.
Prior to the present Agreement,the project had been delivering energy to Idaho
Power under a February 2013 Agreement that expires March 1,2015.Simplot proposes to
continue to operate and maintain its 15.9 MW energy facility,but the Agreement will generally
limit delivery to 10 aMW per month.Simplot will be required to provide data on the facility that
Idaho Power will use to confirm that under normal and/or average conditions,the facility will not
exceed 10 aMW on a monthly basis.Should the facility exceed 10 aMW,Idaho Power will
accept the energy that does not exceed the “maximum capacity amount”(i.e.,inadvertent energy)
of 15.9 MW,but will not purchase or pay for the inadvertent energy.
Because the facility is already interconnected and selling energy to Idaho Power,the
Agreement specifies a Scheduled First Energy Date and Schedule Operation Date of March 1,
2015,but shall take effect no later than 120 days after this Commission’s final,non-appealable
Order approving the Agreement.The parties recognize that information provided under the prior
agreement may still be applicable to this replacement Agreement.Idaho Power shall accept the
previously submitted information and request updates or require new information to comply with
the requirements needed for Simplot to be granted a First Energy Date and Operation Date for
this replacement Agreement.Also,Idaho Power will monitor the ongoing requirements through
the full term of this Agreement.
Under the Agreement,all applicable interconnection charges and monthly operation
and maintenance charges under Schedule 72 will be assessed to Simplot.
ORDER NO.33240 2
Several terms and conditions in this Agreement vary from the previously approved
agreements,in order to comply with this Commission’s recent Orders.These changes include:
reference to the Intercontinental Exchange (ICE)index and formula;modified provisions
regarding delay liquidated damages and delay security;Simplot’s ownership of the
environmental attributes;provisions providing for revision of initial year monthly net energy
amounts on a monthly rather than quarterly basis;provisions allowing Simplot the option to
claim maintenance will be scheduled at the same time each year with one notification;and
several other minor provisions.
As with all PURPA QF generation,the project must be designated as a network
resource (DNR)to serve Idaho Power’s retail load on its system.To maintain its DNR status,
there must be a power purchase agreement associated with the project’s transmission service
request that maintains compliance with Idaho Power’s non-discriminatory administration of its
Open Access Transmission Tariff (OATT)and maintains compliance with FERC requirements.
STAFF COMMENTS
Staff reviewed the proposed rates and confirmed they are correct.Staff determined
that the terms and conditions in the proposed Agreement are consistent with prior Commission
Orders,and recommended that the Commission approve it.
FINDINGS AND CONCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over Idaho Power,an electric
utility,and the issues raised in this matter under the authority and power granted it under Title 61
of the Idaho Code and PURPA.The Commission has authority under PURPA and Federal
Energy Regulatory Commission (FERC)regulations to set avoided costs,to order electric
utilities to enter into fixed-term obligations for the purchase of energy from QFs,and to
implement FERC rules.
The Commission has reviewed the record in this case,including the Application,the
replacement Agreement,and the comments and recommendations of Commission Staff.We find
that the J.R.Simplot project is qualified to receive the non-levelized published avoided cost rates
contained in the Agreement.We further find that the proposed Agreement contains acceptable
contract provisions consistent with PURPA,FERC regulations,and this Commission’s prior
Orders.We find it reasonable to allow payments made under the Agreement as prudently
incurred expenses for ratemaking purposes.
ORDER NO.33240 3
ORDER
IT IS HEREBY ORDERED that the Firm Energy Sales Agreement dated January 30,
2015,between Idaho Power Company and J.R.Simplot for a one-year term is approved without
change or condition.This Agreement shall expire on March 1,2016.We further declare that all
payments made by Idaho Power to Simplot for purchases of energy will be allowed as prudently
incurred expenses for ratemaking purposes.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of March 2015.
PAUL KJELLA D RESIDENT
Commissioner Raper Did Not Participate
KRISTINE RAPER,COMMISSIONER
ATTEST:
J4n D.Jewel{}
Commission Secretary
O:IPC-E-1 5-O2dh
COMMISSIONER
ORDER NO.33240 4